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Adjustments are additional information to Trial Balance. Main purpose of adj. Entries is to modify the specific ac balance. All adj. Are given just after Trial Balance.
Adjustments are additional information to Trial Balance. Main purpose of adj. Entries is to modify the specific ac balance. All adj. Are given just after Trial Balance.
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Adjustments are additional information to Trial Balance. Main purpose of adj. Entries is to modify the specific ac balance. All adj. Are given just after Trial Balance.
Авторское право:
Attribution Non-Commercial (BY-NC)
Доступные форматы
Скачайте в формате PPT, PDF, TXT или читайте онлайн в Scribd
Trial Balance. • The main purpose of adj. entries is to modify the specific a\c balance so that the true situation of that a\c is reflected at the end of the period. • All adj. are given just after Trial Balance. Important Adjustments • 1.Closing Stock- Unsold or unused stock for the current year.
• Debit- B\S ( Current Assets )
• Credit- Trading A\c( Cr. Side ) Adjustments • 2.Depreciation- Use of fixed assets for the current year.
• Debit- P & L A\c (Dr. side )
• Credit- Deduct from fixed assets in B\S Adjustments • 3.Outstanding Expenses- Services recd, money is not paid.
• Credit-Deduct from P&L A\c (Dr. side) Adjustments • 5.Income recd. in advance- money recd., but services not yet given for the same.
• Debit-Deduct from P&LA\c- (Credit
side) • Credit- B\S (Current Liabilities) Adjustments • 6.Income receivable/ Income Accrued- services given but money not yet recd.
• Debit- B\S (Current Assets)
• Credit- P&L A\c (Credit side) Adjustments • Bad debts- When goods are sold on credit it may sometimes happen that the customers may not be able to fulfill their obligations. • The amount which cannot be recovered is considered as loss called bad debts. • Debit- P&L A\c (Debit side) • Credit- Deduct from Debtors (B/S) Rectification of Errors • 1. Errors of Omission: When any transaction is remained to be recorded in the books of accounts, The error of omission takes place. • For eg. Credit sale of Rs 1000 to Y not recorded in the books. Rectification of Errors • 2.Errors of Principle- When a particular transaction is recorded in the books without considering the principles of book keeping, this error takes place. • For eg. Salary paid is debited to Rent account instead of Salary account. Rectification of Errors • 3.Compensating Errors- When one error is compensated by the other error. eg. arithmetical errors. • Salary paid Rs 500 is debited to Salary a/c at Rs 1000; Cash a/c is debited by Rs 500 instead of Rs 1000. Rectification of Errors • 4.Errors of Commission- It includes wrong amount recorded to both sides of a/c, correct amount recorded to wrong side of both the accounts and wrong calculations.